Canada’s oil and gas sector is riding a rollercoaster heading into 2026.
Looking back at 2025, geopolitical chaos—like the Israel-Iran strikes and fresh Russian sanctions—sparked price swings that initially gave the Canadian Dollar a boost. But that spike was shortlived. A global oversupply (thanks to huge US output) eventually dragged Brent prices down to the high $60 (USD) range.
Despite those lower averages, the Canadian domestic oil and gas industry is pivoting to a "production first" mindset. Global business intelligence firm IBISWorld projects revenues will skyrocket to USD 265.8bn by the end of 2026, fueled by a 45.5% uptick this year as producers capitalize on global supply shifts.
On the other hand, the International Energy Agency expects a bit of a market surplus. Demand is still climbing—especially for petrochemicals. Plus, with new LNG projects finally coming online, Canada is set to become a major player in easing global gas crunches. It’s looking like a high-stakes, high-reward era for the Great White North.
CNRL is a perfect example of this aggressive push. On the operational side, CNRL smashed its previous records by churning out 1,571 MBOE/d in FY 25. To put that in perspective, that’s a 15% jump from the 1,363 MBOE/d they were hitting back in 2024.
Crude gains
CNRL’s revenue climbed 9% y/y to nearly CAD 38.8bn ($28.5bn) in FY 25, but the real headline was the CAD 10.8bn in net earnings—a 77% leap from the year before. While some of that was likely boosted by one-off items (since adjusted earnings stayed steadier at CAD 7.4bn), the cash machine was firing on all cylinders.
The company pumped out over CAD 15bn in operating cash flow, giving the company plenty of dry powder to reward shareholders and tidy up the balance sheet.
CNRL took an 8% hit on oil and NGLs at CAD 71.5/bbl due to lower benchmark pricing, but a 35% surge in natural gas prices to CAD 2.5/mcf—thanks to stronger AECO (Canadian benchmark for natural gas) and NYMEX (North American and international benchmark) prices—helped balance the scales.
North American E&P liquids production saw a sharp 24% jump to 294,315 bbl/d. This growth was fueled by strategic acquisitions, including the Palliser Block and Montney assets.
Pipe dreams realized?
CNRL’s stock is sitting at CAD 60.1 and boasting a solid 30.5% jump over the past year. It’s flirting with that 52-week high of CAD 70.9. Analysts project a 15.3% upside toward an average target price of CAD 69.7.
Even with a CAD 128bn (USD 92.6bn) market cap, the valuation feels pretty grounded. At 12.1x, the 2026 P/E ratio sits right at its three-year historical average of 12.1x. While the pros are fairly evenly split—10 Buy and 11 Hold ratings—the dividend story is the real sweetener.
With dividend yields expected to climb from 4.1% to 4.3% by FY 28, it’s shaping up to be a steady paycheck play for anyone willing to ride the energy waves.
Taxing times
Investing in CNRL comes with a few (obvious) headaches. We are talking about oil and gas prices. If prices tank, so do the company’s earnings.
Then there’s the green transition. Canada is tightening the screws on carbon pricing and methane rules, which just forced CNRL to pause a CAD 8.3bn expansion project. It’s a lot of regulatory red tape to dodge.
Operationally, the firm is dealing with debt—around CAD 16.6bn—and when interest rates go up, that bill gets expensive. Throw in some geopolitical drama (like Venezuela flooding the market with heavy crude) and the occasional cyber threat and they’ve got their hands full.
